On 13 January 2017, President Obama signed an Executive Order (“E.O.”) entitled “Recognizing Positive Actions by the Government of Sudan and Providing for the Revocation of Certain Sudan-Related Sanctions”. In effect, the E.O. allows for the conditional lifting of sanctions against Sudan on 12 July 2017.
In conjunction with the new E.O., the US Department of the Treasury's Office of Foreign Assets Control (“OFAC”) has issued a new general licence under the Sudanese Sanctions Regulations, 31 C.F.R. part 538 (“SSR”). The new general licence authorises all transactions prohibited by the SSR and two Executive Orders (E.O. 13067 and 13412), and unblocks previously blocked property in which the Government of Sudan has an interest.
The new general licence is effective upon the date of publication in the Federal Register, being today, 17 January 2017. As a result, U.S. persons are generally permitted to transact with individuals and entities in Sudan, including the Government of Sudan, from 17 January 2017.
The new general licence
The new general license has been added at section 538.540 of the SSR. It authorises U.S. persons to process transactions involving persons in Sudan; to engage in imports and exports that were previously prohibited under the SSR; and to engage in transactions involving property in which the Government of Sudan has an interest.
As a result, the following amendments have been included:
- All property and interests in property blocked pursuant to the SSR are unblocked.
- All trade between the United States and Sudan that was previously prohibited by the SSR is authorised.
- All transactions by U.S. persons relating to the petroleum or petrochemical industries in Sudan that were previously prohibited by the SSR are authorised, including oilfield services and oil and gas pipelines.
- U.S. persons are no longer be prohibited from facilitating transactions between Sudan and third countries, to the extent these were previously prohibited by the SSR.
The new E.O
The new E.O. provides for the permanent revocation of the sanctions provisions in E.O.s 13067 and 13412 on 12 July 2017 if the Government of Sudan sustains the positive actions it has taken over the past 6 months
The regulatory changes will not impact Sudanese individuals or entities blocked pursuant to E.O. 13400 of April 27, 2006, “Blocking Property of Persons in Connection With the Conflict in Sudan’s Darfur Region,” or affect any other OFAC sanctions programme other than the SSR, E.O. 13067, and E.O. 13412.
Additionally, individuals will still be required to comply with other applicable provisions of law, including the Export Administration Regulations (15 C.F.R. parts 730 through 774) administered by the Bureau of Industry and Security of the Department of Commerce.
As of 17 January 2017, US persons and entities may once again export their products and services to Sudan. US companies are permitted to invest in Sudan and individuals and entities may participate in financial transactions with or related to Sudan, including the Government of Sudan, including in US-dollars. In all cases, all remaining sanctions and laws must be complied with.
For clients wishing to transact with Sudan, it is worthwhile noting that the comprehensive sanctions embargo against Sudan may be reinstated in the event that Sudan’s “positive actions” are not sustained over the next 6 months. As with our recommendations in relation to the Iran snapback provisions, we would recommend that clients insert appropriate contractual provisions in agreements to protect against the sanctions being reinstated and develop wind-down and exit strategies that can be used in the event that this becomes necessary.